Independent Banker - December 2019 - 31

Next: It's time to look back at how your portfolio performed
But where is the value for the small business? Many
community bankers will probably guess this one: It's relationship
banking that emerges as a primary consideration.
(See sidebar, right.)
" Since community banks' bread and butter is supporting
small businesses, off ering credit cards is yet another way
that we provide valuable services to this important segment
of our market, " says Damon Moorer, president and CEO of
$300 million-asset TCM Bank, N.A., an ICBA Bancard subsidiary
headquartered in Tampa, Fla. " Small businesses are
able to leverage a tool to make it easy to account for their
spending. If then they see an additional value proposition,
such as cash back or some type of reward, it makes sense for
them to use credit cards as a tool to manage their fi nances. "
Scale and efficiency
For Chad King, director of business services at $2.5 billion-asset
First State Community Bank in Farmington, Mo.,
a signifi cant part of a small business credit card program's
success lies in its ability to scale to a business' requirements
and help that business manage internal processes.
" By issuing our own credit cards, we have the ability to
customize the program based on the specifi c customer's
needs, " King says. " For instance, we can adjust the billing
cycle to match their preferred payment date. We can issue
cards to employees that have diff erent credit limits and
diff erent spending restrictions. We can set the business up
with multiple online administrators that have the ability to
make payments, change limits and add or remove cards. "
King shares an example of a business customer who,
prior to joining First State Community Bank's small business
credit card program, had a business administrator
managing three diff erent business cards with three diff erent
organizations for three diff erent purposes. It was time-consuming,
ineffi cient and risky when considering potential
fraud. Now, with the entire portfolio at one bank, the business
administrator can run reports to monitor spending,
change limits as needed, remove and add restrictions, and
more-all from her online portal.
But First State Community Bank is also committed to
off ering high-tech, high-touch services. " It's important
to provide customers with the technology to do what they
need, but also the access to assistance when they need it, "
King says. " That's why we have a dedicated support team
that handles the customer service calls. "
Boosting income for banks
Beyond the benefi ts to the business, small business credit card
programs drive value for community banks. Off ering small
business credit cards creates a new stream of noninterest
income. It also off ers treasury management benefi ts: When
a community bank provides a credit card to a small business
customer, there may be less of an immediate pull on that customer's
cash, allowing the bank to retain deposits for longer.
" Credit cards are still the highest-volume payments channel
and still growing at a double-digit rate annually, " says
Tina Giorgio, president and CEO of ICBA Bancard. " We fi nd
with small businesses, the ticket price is higher and the payback
is better. "
And it may not be laborious to institute these off erings
if banks capitalize on existing lending relationships
and incoming applications. As a loan is moving through
appropriate underwriting steps, so too can the small business
candidate be evaluated for a business credit card. By
incorporating the evaluation into a parallel track with a
traditional loan due diligence eff ort, community banks can
address two products for one client.
" We recommend keeping the small business credit card
off ering front of mind for everyone, " King says. " We help
our loan offi cers know the benefi ts of recommending a small
business credit card as they go through the loan fi nalization
and approval process. "
With all of this opportunity, how can a community bank
get started? For one, it may want to consider an agent issuer
who could conduct a needs assessment and determine the
product type that best aligns with its potential off erings.
" If community banks don't have an unsecured lending
person on staff , they should partner with someone to off er
those products and services, " Giorgio says. " By partnering
with an agent issuer, they're able to off er competitive products
and solutions that would be cost-prohibitive if they
tried to do it themselves. "
Colleen Morrison is a writer in Virginia.
independentbanker.org Q 27
How cards benefit small businesses
A 2018 study from Mercator Advisory Group
found that the biggest card benefits reported
by small businesses include:
79%
No annual fee
78%
Good customer service
77%
A generous-usually more
than $10,000-credit line
75%
Rewards
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Independent Banker - December 2019

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